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Five Essentials That Will Save You Money and Aggravation in Buying Life Insurance
STEP ONE: Comparison Shopping
There are many companies selling term insurance today and rates vary widely (as much as 300%). Get several quotes and compare. Be sure any guarantee offered by a company or agent is in writing. To save you time in shopping, you can view comparison rates on-line from the nation's top insurance companies. An Instant Quote link is located above. This on-line comparison can save you hours of frustration gathering quotes from different brokers. We represent America's top companies that stand out from the rest. But we want you to see why they are the best. So, on your quote, you'll find those companies that we consider to have the most competitive term and Universal products available today. If you visit other sites, the same companies should appear.
We have found there are about seven to ten companies that are consistently at the top of any spreadsheet. They are listed on the next link: "The Top Companies."
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Here's one last suggestion on comparison-shopping. If you find an agent is pushing one company's product, that agent may only represent one company. That should throw up a red flag and you may want to move on.
A second point is you should avoid part-time agents. You don't want to trust a key part of your financial planning to someone with little experience and no knowledge of the companies' underwriting practices (even if it's your brother-in-law).
STEP TWO: Company Financial Stability
Does it make a difference who insures your life? We think it does! Many think the most important consideration in buying term or Universal life insurance is "cost." In fact, we have found cost to be one of the least important considerations. Today, more than ever, it's important to know about the life insurer that guarantees your financial plans. Finding a good company to buy from is not a difficult task. Choose a carrier with superior financial rating and a commitment to the insurance marketplace.
Life Insurance Ratings
In terms of financial stability, the last several years brought significant changes in the insurance industry. During the 1980s and 1990s, there were some "hot" insurance companies. Today some of these are not in business anymore. It's important to remember that when you buy life insurance, you are buying a guarantee for the future. For example, term insurance policies today have long rate guarantees, some as long as life. Therefore the most important consideration in buying life insurance is company stability, now more than ever. Once company financial stability is determined, then consider cost. If you can buy a product for about the same price as another, doesn't it make sense to go with the higher rated company? You want to stick with companies that are rated A++ or A+ by the AM Best Company. On some occasions we will use an A rated carrier who is also considered excellent, though not in the highest bracket.
STEP THREE: Subsidiaries
Are the companies you are comparing small subsidiaries of larger parent firms? This is a very important. Many large companies are forming alliances with smaller companies to sell specialty products, such as term and term-like insurance. While only a fraction of the size of its parent, a subsidiary often inherits the financial rating of the larger firm. When you buy insurance in this way, you are actually buying from the subsidiary company, not the parent company. If the parent company later sells the subsidiary, the security and rating of the parent company is lost. It also means that the sold company, not the parent, retains your insurance policy and the guarantees that go with it. While the parent and its subsidiary are not married to each other for "better or worse, " as a policyholder, you are married to the subsidiary as its insured for 10 or 20 years or even longer. The financial details of a company are as close as your local library. Ask for the Best's Insurance Reports - Life/Health Edition (United States).
STEP FOUR: Rate Guarantee
Read the contract rate-guarantee specifications before you sign. With the exception of those who have learned the hard way, most people assume that the premium for a term policy when purchased for a specified time period is guaranteed. This is not always the case. It's possible that a company could advertise a twenty-policy and post a rate for those twenty years. However, a closer reading of the policy reveals that the company does not guarantee that rate for the full twenty years. A guarantee could be three, five years or ten years. In this case, the rate projected to stay level for the twenty years, is not guaranteed. Once the rate guarantee period has passed, companies can adjust the rate up to the sky. Read proposals and contracts carefully. If the rate is for 10, 15 or 20 years, make sure your provider guarantees it. All plans quoted on AmericaQuote are guaranteed for the full level-term period.
Here's another suggestion. If you own a term policy that is 5-8 years old or longer and are in good heath, it's time to shop again. Rates have dropped considerably in that period.
STEP FIVE: Cost
Only after first establishing financial stability, subsidiary status, and rate guarantee should the issue of cost become a consideration. Here's a very important point. We get many calls from viewers asking if we offer the lowest rates. Most people don't realize the premium for a policy from the same company, in the same health category will be the SAME regardless where you buy it.
Let's say the ABC Company offers a policy to the public. Every broker or company selling that product must offer it at the same price for that particular health category (even if you buy it directly from the company). If you go to several sites, the premiums quoted for that ABC policy must be the same for that health category.
The insurance company posts the premiums with your state's insurance department. Brokers cannot change those listed rates. Where you will see differences from site to site is in which health category they quote. That's why you need to be aware of what the underwriting requirements are for multiple companies (more about that later). Then you can be sure you will receive the best possible rate. That's where a good broker (like us) comes in.
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